Posted on 12/24/2007 7:55:05 AM PST by Alex Murphy
WASHINGTON — Mike Huckabee, one of the most conservative Republicans in the 2008 presidential race, has embraced one of the most radical ideas on the campaign trail: a plan to abolish all federal income and payroll taxes and replace them with a single 23% national sales tax.
The idea -- dubbed the "fair tax" by proponents -- has been a political asset for Huckabee; its well-organized backers have helped catapult him from the back of the presidential pack to its top tier.
Sales tax proponents have tapped into seething voter hostility toward the Internal Revenue Service to become a below-the-radar political force, popping up at campaign events and candidate forums in Iowa and elsewhere.
The efforts on Huckabee's behalf by sales tax advocates helped spur his surprise second-place showing in an August Iowa straw poll -- the breakthrough that marked the beginning of his rise in the state and nationwide.
He is the only major presidential candidate to make the idea central to his campaign. "The first thing I'd love to do as president: Put a 'going out of business' sign on the Internal Revenue Service," he said at one debate.
Some wonder, however, whether his embrace of the plan eventually could turn into a liability.
The sales tax proposal has been around for years but languished on the fringes of practical politics and policy. Tax professionals generally regard the idea as impractical, regressive and even "crackpot," as one critic puts it.
It has gone nowhere in Congress. The 2005 Presidential Advisory Panel on Federal Tax Reform soundly rejected the idea. And many politicians shy away from it because it is easy for opponents to portray it as a huge tax increase -- as Democrats did in a 2006 Senate race in South Carolina.
(Excerpt) Read more at latimes.com ...
Don’t forget that under the FairTax, about 1/3rd of the FairTax is supporting SS/M. So we’ll have retirees who’ve paid their whole working lives into those programs continue contributing into them even as they get benefits back out from them. As you say, sometimes having to pay that tax from money that was already taxed once.
Of course, nobody mentions that the FairTax effectively lifts the cap on the SS taxes. Someone earning $500K/yr will no longer stop paying into SS when their earnings exceed $97K — they’ll continue paying on all their purchases, even though their SS benefit will be no larger.
Since FairTax is on all purchases, we’d also be dragging school teachers, railroad workers, etc. into the SS system, creating a huge new liability of people that don’t currently pay into or receive benefits from SS.
And isn’t the Prebate a spiffy solution ? It panders to people by promising they’ll pay an effective zero tax rate if their spending is low enough. Somebody that currently at least pays into SS/M can pay nothing under the FairTax and yet still receive SS/M benefits when they retire. Heck, let’s all vote for huge increases in the fastest growing entitlement programs because our income is low enough that the prebate will pay for any increase in FairTax rate !
Eliminate the prebate, keep SS/M funding as a separate tax on wages, and use a 12% FairTax rate.
And they’re in no way “stupid” in any event. It would be interesting to see how your tune changes should you get into one of those “unforeseen” situations.
But perhaps it’s just that most people are dumber than you?? Is that your story???
I don't get to keep my income tax withholding? I don't get to keep my SS and Medicare taxes I'm paying today? Why not?
They are currently getting hit for 30% (exclusive, or 23% inclusive) by the taxes embedded in the price of everything you buy.
LOL! Math is hard.
You understand prices will rise under the FairTax?
Of course not since they won’t - they’ll decline somewhat.
That's funny. So, prices fall, take home pay rises and I get a prebate?
Your grasp of economics has great gaps it seems.
You shouldn't talk about economics until you figure out math.
Ok, so it just makes the point better. You have to earn around $140 to have $100 after a 28% tax. After the FairTax, if the price says $100, you earn $100, you pay $100. $23 of that is the tax.
Can you grasp the concept of embedded taxes, or the difference between taxes quoted inclusively or exclusively?
Do you understand that corporations do not pay taxes? They simply pass the taxes along to consumers in the price of the product. You already pay that today with your savings that has already been taxed. The FairTax removes one tax, and replaces it with another.
Instead of hiding taxes in the cost of a product, or as withholdings from your paycheck, you pay it at the point of purchase, with the amount clearly stated on the receipt.
That will reduce tax revenue. Do you have a link to his plan to either reduce spending or increase the deficit?
Great. So now I have $100 in the bank.
After the FairTax, if the price says $100, you earn $100, you pay $100. $23 of that is the tax.
Great, I paid $40 in income tax and $23 (30%) for the sales tax. Sign me up!!!
Can you grasp the concept of embedded taxes, or the difference between taxes quoted inclusively or exclusively?
You believe embedded taxes on goods sold now are 23%?
The FairTax removes one tax, and replaces it with another.
But I don't get my withholding back, so it doesn't really remove my income tax, does it?
Are you saying that this is only an end product tax and that producers are exempt from the tax?
My take is that there's no economics nor math here at all. This is pure politics to get people to go for Huck, in spite of the fact that Huck's making no promises about cutting either spending or taxes.
Worse yet is how the Huck tax will end the small businesses that have given us the economic growth we've had. You'll be forced to work for a big company because the minute you try and quit and contract out your work you get slapped with the Huck-tax on your work-hours.
Say good-by to economic independence and say hello to one or two monster corporations..
You just don't understand hydrogen technology. Take a physics class will ya. LOL!
In the meantime, let's play Russian roulette with the world's largest and most successful economy and hope those prices drop.....and that I get my prebate.....and that the velocity doesn't slow.....and......
Good grief. The snake oil pitch never changes - only what they're sellin'.
You can slap a tax on producers/manufacturers/corporations all you want, but they just pass it on to the consumer in the price of their product anyway.
My take is that there's no economics nor math here at all. This is pure politics to get people to go for Huck, in spite of the fact that Huck's making no promises about cutting either spending or taxes.
The FairTax movement has been around long before Huckabee entered the Presidential Race. Huckabee could be using the plan to attract people. Single issue (FairTax) voters may be trying to push support to Huckabee because he has latched onto the tax idea they like.
FWIW, I like that he is bringing more attention to the FairTax, but I do not support him. He is far too liberal on too many other issues.
I doubt it would be passed on that basis. To think that it would mean an automatic, unending upward spiral in the single tax rate, though, doesn’t seem reasonable to me since it would mean that each taxpayer would be encouraging his congressman to increase his own tax rate - an unlikely scenario. Indeed I think it would be more likely to happen in just the opposite fashion. The taxpayer by and large would be pressuring for a reduced tax rate.
My own preference would be to see both SS & MC eliminated period - but that’s probably not going to happen either. I’d certainly accept the compromise with the prebate and the slightly increased rate to get the tax system on a reasonable track. Certainly the present one is not.
The price reduction that even the anti-FairTax crowd agreed on was a 9% reduction ... look it up on earlier threads.
That’s correct - there is no business to business transaction tax as there is in a VAT. Only end consumer purchases are taxed - and not even all of those. Nor is there any tax cascading as a result.
Certainly one of you “can’t do the math” bnut it isn’t kjam22.
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